Congratulations, America.

2016-11-132016-11-12 PNRJ core principles, current events, ethics, public policy bigotry, Donald Trump, election, Electoral College, George W. Bush, Hillary Clinton, Kim Jong-un, racism, sexism, Vladimir Putin, voting

Nov 13, JDN 2457676

Congratulations, you elected Donald Trump.

Instead of the candidate with decades of experience as Secretary of State, US Senator, and an internationally renowned philanthropist, you chose the first President in history to not have any experience whatsoever in government or the military.

Instead of the candidate with the most comprehensive, evidence-based plan for action against climate change (that is, the only candidate who supports nuclear energy), you elected the one who is planning to appoint a climate-change denier head of the EPA.

Perhaps to punish the candidate who carried out a longstanding custom of using private email servers because the public servers were so defective, you accepted the candidate who is being charged with not only mass fraud but also multiple counts of sexual assault.

Perhaps based on the Russian propaganda—not kidding, read the URL—saying that one candidate could trigger a Third World War, you chose the candidate who has no idea how international diplomacy works and wants to convert NATO into a mercantilist empire (and by the way has no apparent qualms about deploying nuclear weapons).

Because one candidate was “too close to Wall Street” in some vague ill-defined sense (oh my god, she gave speeches! And accepted donations!), you elected the other one who has already vowed to turn back the financial regulations that are currently protecting us from a repeat of the Great Recession.

Because you didn’t trust the candidate with one of the highest honest ratings ever recorded, you elected the one who is surrounded by hundreds of scandals and never even released his tax returns.
Even if you didn’t outright agree with it, you were willing to look past his promise to deport 11 million people and his long history of bigotry toward a wide variety of ethnic groups.
Even his Vice President, who seems like a great statesman simply by comparison, is one of the most fanatical right-wing Vice Presidents we’ve had in decades. He opposes not just abortion, but birth control. He supports—and has signed as governor—“religious freedom” bills designed to legalize discrimination against LGBT people.

Congratulations, America. You literally elected the candidate that was supported by Vladimir Putin, Kim Jong-un, the American Nazi Party, and the Klu Klux Klan. Now, reversed stupidity is not intelligence; being endorsed by someone horrible doesn’t necessarily mean you are horrible. But when this many horrible people endorse you, and start giving the same reasons, and those reasons are based on things you particularly have in common with those horrible people like bigotry and authoritarianism… yeah, I think it does say something about you.

Now, to be fair, much of the blame here goes to the Electoral College.

By current counts, Hillary Clinton won the popular vote by at least 500,000 votes. It is projected that she may even win by as much as 2 million. This will be the fourth time in US history that the Electoral College winner was definitely not the popular vote winner.

But even that is only possible because Hillary Clinton did not win the overwhelming landslide she deserved. The Electoral College should have been irrelevant, because she should have won at least 60% of every demographic in every state. Our whole nation should have declared together in one voice that we will not tolerate bigotry and authoritarianism. The fact that that didn’t happen is reason enough to be ashamed; even if Clinton will slightly win the popular vote that still says something truly terrible about our country.

Indeed, this is what it says:

We slightly preferred democracy over fascism.

We slightly preferred liberty over tyranny.

We slightly preferred justice over oppression.

We slightly preferred feminism over misogyny.

We slightly preferred equality over racism.

We slightly preferred reason over instinct.

We slightly preferred honesty over fraud.

We slightly preferred sustainability over ecological devastation.

We slightly preferred competence over incompetence.

We slightly preferred diplomacy over impulsiveness.

We slightly preferred humility over narcissism.

We were faced with the easiest choice ever given to us in any election, and just a narrow majority got the answer right—and then under the way our system works that wasn’t even enough.

I sincerely hope that Donald Trump is not as bad as I believe he is. The feeling of vindication at being able to tell so many right-wing family members “I told you so” pales in comparison to the fear and despair for the millions of people who will die from his belligerent war policy, his incompetent economic policy, and his insane (anti-)environmental policy. Even the working-class White people who voted for him will surely suffer greatly under his regime.

Yes, I sincerely hope that he is not as bad as we think he is, though I remember saying that George W. Bush was not as bad as we thought when he was elected—and he was. He was. His Iraq War killed hundreds of thousands of people based on lies. His economy policy triggered the worst economic collapse since the Great Depression. So now I have to ask: What if he is as bad as we think?

Fortunately, I do not believe that Trump will literally trigger a global nuclear war.

Then again, I didn’t believe he would win, either.

We need to be honest about free trade’s costs, and clearer about its benefits

2016-08-062016-08-06 PNRJ core principles, ethics, public policy Bernie Sanders, China, Denmark, Donald Trump, environment, environmentalism, exports, free trade, globalization, imports, job guarantee, Naomi Klein, poverty, The Economist, William Poole

August 6, JDN 2457607

I discussed in a post awhile ago the fact that economists overwhelmingly favor free trade but most people don’t. There are some deep psychological reasons for this, particularly the loss aversion which makes people experience losses about twice as much as they experience gains. Free trade requires change; it creates some jobs and destroys others. Those forced transitions can be baffling and painful.

The good news is that views on trade in the US are actually getting more positive in recent years—which makes Trump that much more baffling. I honestly can’t make much sense of the fact that candidates who are against free trade have been so big in this election (and let’s face it, even Bernie Sanders is largely against free trade!), in light of polls showing that free trade is actually increasingly popular.

Partly this can be explained by the fact that people are generally more positive about free trade in general than they are about particular trade agreements, and understandably so, as free trade agreements often include some really awful provisions that in no way advance free trade. But that doesn’t really explain the whole effect here. Maybe it’s a special interest effect: People who hate trade are much more passionate about hating trade than people who like trade are passionate about liking trade. If that’s the case, then this is what we need to change.

Today I’d like to focus on what we as economists and the economically literate more generally can do to help people understand what free trade is and why it is so important. This means two things:

First, of course, we must be clearer about the benefits of free trade. Many economists seem to think that it is simply so obvious that they don’t even bother to explain it, and end up seeming like slogan-chanting ideologues. “Free trade! Free trade! Free trade!”

Above all, we need to talk about how it was primarily through free trade that global extreme poverty is now at the lowest level it has ever been. This benefit needs to be repeated over and over, and anyone who argues for protectionism needs to be confronted with the millions of people they will throw back into poverty. Most people don’t even realize that global poverty is declining, so first of all, they need to be shown that it is.

American ideas are often credited with fighting global poverty, but that’s not so convincing, since most of the improvement in poverty has happened in China (not exactly a paragon of free markets, much less liberal democracy); what really seems to have made the difference is American dollars, spent in free trade. Imports to the US from China have risen from $3.8 billion in 1985 to $483 billion in 2015. Extreme poverty in China fell from 61% of the population in 1990 to 4% in 2015. Coincidence? I think not. Indeed, that $483 billion is just about $1 per day for every man, woman, and child in China—and the UN extreme poverty line is $1.25 per person per day.

We need to be talking about the jobs that are created by trade—if need be, making TV commercials interviewing workers at factories who make products for export. “Most of our customers are in Japan,” they might say. “Without free trade, I’d be out of a job.” Interview business owners saying things like, “Two years ago we opened up sales to China. Now I need to double my workforce just to keep up with demand.” Unlike a lot of other economic policies where the benefits are diffuse and hard to keep track of, free trade is one where you can actually point to specific people and see that they are now better off because they make more selling exports. From there, we just need to point out that imports and exports are two sides of the same transaction—so if you like exports, you’d better have imports.

We need to make it clear that the economic gains from trade are just as real as the losses from transition, even if they may not be as obvious. William Poole put it very well in this article on attitudes toward free trade:

Economists are sometimes charged with insensitivity over job losses, when in fact most of us are extremely sensitive to such losses. What good economics tells us is that saving jobs in one industry does not save jobs in the economy as a whole. We urge people to be as sensitive to the jobs indirectly lost as a consequence of trade restriction as to those lost as a consequence of changing trade patterns.

Second, just as importantly, we must be honest about the costs of free trade. We need to stop eliding the distinction between net aggregate benefits and benefits for everyone everywhere. There are winners and losers, and we need to face up to that.

For example, we need to stop saying thinks like “Free trade will not send jobs to Mexico and China.” No, it absolutely will, and has, and does—and that is part of what it’s for. Because people in Mexico and China are people, and they deserve to have better jobs just as much as we do. Sending jobs to China is not a bug; it’s a feature. China needs jobs particularly badly.

Then comes the next part: “But if our jobs get sent to China, what will we do?” Better jobs, created here by the economic benefits of free trade. No longer will American workers toil in factories assembling parts; instead they will work in brightly-lit offices designing those parts on CAD software.

Of course this raises another problem: What happens to people who were qualified to toil in factories, but aren’t qualified to design parts on CAD software? Well, they’ll need to learn. And we should be paying for that education (though in large part, we are; altogether US federal, state, and local governments spend over $1 trillion a year on education).

And what if they can’t learn, can’t find another job somewhere else? What if they’re just not cut out for the kind of work we need in a 21st century economy? Then here comes my most radical statement of all: Then they shouldn’t have to.

The whole point of expanding economic efficiency—which free trade most certainly does—is to create more stuff. But if you create more stuff, you then have the opportunity to redistribute that stuff, in such a way that no one is harmed by that transition. This is what we have been failing to do in the United States. We need to set up our unemployment and pension systems so that people who lose their jobs due to free trade are not harmed by it, but instead feel like it is an opportunity to change careers or retire. We should have a basic income so that even people who can’t work at all can still live with dignity. This redistribution will not happen automatically; it is a policy choice we must make.

In theory there is a way around it, which is often proposed as an alternative to a basic income; it is called a job guarantee. Simply giving everyone free money for some reason makes people uncomfortable (never could quite fathom why; Donald Trump inherits capital income from his father, that’s fine, but we all inherit shared capital income as a nation, that’s a handout?), so instead we give everyone a job, so they can earn their money!

Well, here’s the thing: They won’t actually be earning it—or else it’s not a job guarantee. If you just want an active labor-market program to retrain workers and match them with jobs, that sounds great; Denmark has had great success with such things, and after all #ScandinaviaIsBetter. But no matter how good your program is, some people are going to not have any employable skills, or have disabilities too severe to do any productive work, or simply be too lazy to actually work. And now you’ve got a choice to make: Do you give those people jobs, or not?

If you don’t, it’s not a job guarantee. If you do, they’re not earning it anymore. Either employment is tied to actual productivity, or it isn’t; if you are guaranteed a certain wage no matter what you do, then some people are going to get that wage for doing nothing. As The Economist put it:

However, there are two alternatives: give people money with no strings attached (through a guaranteed basic income, unemployment insurance, disability payments, and so forth), or just make unemployed people survive on whatever miserable scraps they can cobble together.

If it’s really a job guarantee, we would still need to give jobs to people who can’t work or simply won’t. How is this different from a basic income? Well, it isn’t, except you added all these extra layers of bureaucracy so that you could feel like you weren’t just giving a handout. You’ve added additional costs for monitoring and administration, as well as additional opportunities for people to slip through the cracks. Either you are going to leave some people in poverty, or you are going to give money to people who don’t work—so why not give money to people who don’t work?

Another cost we need to be honest about is ecological. In our rush to open free trade, we are often lax in ensuring that this trade will not accelerate environmental degradation and climate change. This is often justified in the name of helping the world’s poorest people; but they will be hurt far more when their homes are leveled by hurricanes than by waiting a few more years to get the trade agreement right. That’s one where Poole actually loses me:

Few Americans favor a world trading system in which U.S. policies on environmental and other conditions could be controlled by foreign governments through their willingness to accept goods exported by the United States.

Really? You think we should be able to force other countries to accept our goods, regardless of whether they consider them ecologically sustainable? You think most Americans think that? It’s easy to frame it as other people imposing on us, but trade restrictions on ecologically harmful goods are actually a very minimal—indeed, almost certainly insufficient—regulation against environmental harm. Oil can still kill a lot of people even if it never crosses borders (or never crosses in liquid form—part of the point is you can’t stop the gaseous form). We desperately need global standards on ecological sustainability, and while we must balance environmental regulations with economic efficiency, currently that balance is tipped way too far against the environment—and millions will die if it remains this way.

This is the kernel of truth in otherwise economically-ignorant environmentalist diatribes like Naomi Klein’s This Changes Everything; free trade in principle doesn’t say anything about being environmentally unsustainable, but free trade in practice has often meant cutting corners and burning coal. Where we currently have diesel-powered container ships built in coal-powered factories and Klein wants no container ships and perhaps even no factories, what we really need are nuclear-powered container ships and solar-powered factories. Klein points out cases where free trade agreements have shut down solar projects that tried to create local jobs—but neither side seems to realize that a good free trade agreement would expand that solar project to create global jobs. Instead of building solar panels in Canada to sell only in Canada, we’d build solar panels in Canada to sell in China and India—and build ten times as many. That is what free trade could be, if we did it right.

The facts will not speak for themselves, so we must speak for them

2016-08-032016-08-03 PNRJ cognitive science, core principles, current events, ethics, heuristics and biases, public policy abortion, argument, bias, climate change, Donald Trump, election, facts, feelings, Hitler, immigration, Islam, John Oliver, media, mercantilism, Muslims, NATO, natural disasters, nuclear weapons, persuasion, politics, Politifact, racism, reality, terrorism, trade, trade policy, truth

August 3, JDN 2457604

I finally began to understand the bizarre and terrifying phenomenon that is the Donald Trump Presidential nomination when I watched this John Oliver episode:

https://www.youtube.com/watch?v=U-l3IV_XN3c

These lines in particular, near the end, finally helped me put it all together:

What is truly revealing is his implication that believing something to be true is the same as it being true. Because if anything, that was the theme of the Republican Convention this week; it was a four-day exercise in emphasizing feelings over facts.

The facts against Donald Trump are absolutely overwhelming. He is not even a competent business man, just a spectacularly manipulative one—and even then, it’s not clear he made any more money than he would have just keeping his inheritance in a diversified stock portfolio. His casinos were too fraudulent for Atlantic City. His university was fraudulent. He has the worst honesty rating Politifact has ever given a candidate. (Bernie Sanders, Barack Obama, and Hillary Clinton are statistically tied for some of the best.)

More importantly, almost every policy he has proposed or even suggested is terrible, and several of them could be truly catastrophic.

Let’s start with economic policy: His trade policy would set back decades of globalization and dramatically increase global poverty, while doing little or nothing to expand employment in the US, especially if it sparks a trade war. His fiscal policy would permanently balloon the deficit by giving one of the largest tax breaks to the rich in history. His infamous wall would probably cost about as much as the federal government currently spends on all basic scientific research combined, and his only proposal for funding it fundamentally misunderstands how remittances and trade deficits work. He doesn’t believe in climate change, and would roll back what little progress we have made at reducing carbon emissions, thereby endangering millions of lives. He could very likely cause a global economic collapse comparable to the Great Depression.

His social policy is equally terrible: He has proposed criminalizing abortion, (in express violation of Roe v. Wade) which even many pro-life people find too extreme. He wants to deport all Muslims and ban Muslims from entering, which not just a direct First Amendment violation but also literally involves jackbooted soldiers breaking into the homes of law-abiding US citizens to kidnap them and take them out of the country. He wants to deport 11 million undocumented immigrants, the largest deportation in US history.

Yet it is in foreign policy above all that Trump is truly horrific. He has explicitly endorsed targeting the families of terrorists, which is a war crime (though not as bad as what Ted Cruz wanted to do, which is carpet-bombing cities). Speaking of war crimes, he thinks our torture policy wasn’t severe enough, and doesn’t even care if it is ineffective. He has made the literally mercantilist assertion that the purpose of military alliances is to create trade surplus es, and if European countries will not provide us with trade surpluses (read: tribute), he will no longer commit to defending them, thereby undermining decades of global stability that is founded upon America’s unwavering commitment to defend our allies. And worst of all, he will not rule out the first-strike deployment of nuclear weapons.

I want you to understand that I am not exaggerating when I say that a Donald Trump Presidency carries a nontrivial risk of triggering global nuclear war. Will this probably happen? No. It has a probability of perhaps 1%. But a 1% chance of a billion deaths is not a risk anyone should be prepared to take.

All of these facts scream at us that Donald Trump would be a catastrophe for America and the world. Why, then, are so many people voting for him? Why do our best election forecasts give him a good chance of winning the election?

Because facts don’t speak for themselves.

This is how the left, especially the center-left, has dropped the ball in recent decades. We joke that reality has a liberal bias, because so many of the facts are so obviously on our side. But meanwhile the right wing has nodded and laughed, even mockingly called us the “reality-based community”, because they know how to manipulate feelings.

Donald Trump has essentially no other skills—but he has that one, and it is enough. He knows how to fan the flames of anger and hatred and point them at his chosen targets. He knows how to rally people behind meaningless slogans like “Make America Great Again” and convince them that he has their best interests at heart.

Indeed, Trump’s persuasiveness is one of his many parallels with Adolf Hitler; I am not yet prepared to accuse Donald Trump of seeking genocide, yet at the same time I am not yet willing to put it past him. I don’t think it would take much of a spark at this point to trigger a conflagration of hatred that launches a genocide against Muslims in the United States, and I don’t trust Trump not to light such a spark.

Meanwhile, liberal policy wonks are looking on in horror, wondering how anyone could be so stupid as to believe him—and even publicly basically calling people stupid for believing him. Or sometimes we say they’re not stupid, they’re just racist. But people don’t believe Donald Trump because they are stupid; they believe Donald Trump because he is persuasive. He knows the inner recesses of the human mind and can harness our heuristics to his will. Do not mistake your unique position that protects you—some combination of education, intellect, and sheer willpower—for some inherent superiority. You are not better than Trump’s followers; you are more resistant to Trump’s powers of persuasion. Yes, statistically, Trump voters are more likely to be racist; but racism is a deep-seated bias in the human mind that to some extent we all share. Trump simply knows how to harness it.

Our enemies are persuasive—and therefore we must be as well. We can no longer act as though facts will automatically convince everyone by the power of pure reason; we must learn to stir emotions and rally crowds just as they do.

Or rather, not just as they do—not quite. When we see lies being so effective, we may be tempted to lie ourselves. When we see people being manipulated against us, we may be tempted to manipulate them in return. But in the long run, we can’t afford to do that. We do need to use reason, because reason is the only way to ensure that the beliefs we instill are true.

Therefore our task must be to make people see reason. Let me be clear: Not demand they see reason. Not hope they see reason. Not lament that they don’t. This will require active investment on our part. We must actually learn to persuade people in such a manner that their minds become more open to reason. This will mean using tools other than reason, but it will also mean treading a very fine line, using irrationality only when rationality is insufficient.

We will be tempted to take the easier, quicker path to the Dark Side, but we must resist. Our goal must be not to make people do what we want them to—but to do what they would want to if they were fully rational and fully informed. We will need rhetoric; we will need oratory; we may even need some manipulation. But as we fight our enemy, we must be vigilant not to become them.

This means not using bad arguments—strawmen and conmen—but pointing out the flaws in our opponents’ arguments even when they seem obvious to us—bananamen. It means not overstating our case about free trade or using implausible statistical results simply because they support our case.

But it also means not understating our case, not hiding in page 17 of an opaque technical report that if we don’t do something about climate change right now millions of people will die. It means not presenting our ideas as “political opinions” when they are demonstrated, indisputable scientific facts. It means taking the media to task for their false balance that must find a way to criticize a Democrat every time they criticize a Republican: Sure, he is a pathological liar and might trigger global economic collapse or even nuclear war, but she didn’t secure her emails properly. If you objectively assess the facts and find that Republicans lie three times as often as Democrats, maybe that’s something you should be reporting on instead of trying to compensate for by changing your criteria.

Speaking of the media, we should be pressuring them to include a regular—preferably daily, preferably primetime—segment on climate change, because yes, it is that important. How about after the weather report every day, you show a climate scientist explaining why we keep having record-breaking summer heat and more frequent natural disasters? If we suffer a global ecological collapse, this other stuff you’re constantly talking about really isn’t going to matter—that is, if it mattered in the first place. When ISIS kills 200 people in an attack, you don’t just report that a bunch of people died without examining the cause or talking about responses. But when a typhoon triggered by climate change kills 7,000, suddenly it’s just a random event, an “act of God” that nobody could have predicted or prevented. Having an appropriate caution about whether climate change caused any particular disaster should not prevent us from drawing the very real links between more carbon emissions and more natural disasters—and sometimes there’s just no other explanation.

It means demanding fact-checks immediately, not as some kind of extra commentary that happens after the debate, but as something the moderator says right then and there. (You have a staff, right? And they have Google access, right?) When a candidate says something that is blatantly, demonstrably false, they should receive a warning. After three warnings, their mic should be cut for that question. After ten, they should be kicked off the stage for the remainder of the debate. Donald Trump wouldn’t have lasted five minutes. But instead, they not only let him speak, they spent the next week repeating what he said in bold, exciting headlines. At least CNN finally realized that their headlines could actually fact-check Trump’s statements rather than just repeat them.
Above all, we will need to understand why people think the way they do, and learn to speak to them persuasively and truthfully but without elitism or condescension. This is one I know I’m not very good at myself; sometimes I get so frustrated with people who think the Earth is 6,000 years old (over 40% of Americans) or don’t believe in climate change (35% don’t think it is happening at all, another 30% don’t think it’s a big deal) that I come off as personally insulting them—and of course from that point forward they turn off. But irrational beliefs are not proof of defective character, and we must make that clear to ourselves as well as to others. We must not say that people are stupid or bad; but we absolutely must say that they are wrong. We must also remember that despite our best efforts, some amount of reactance will be inevitable; people simply don’t like having their beliefs challenged.

Yet even all this is probably not enough. Many people don’t watch mainstream media, or don’t believe it when they do (not without reason). Many people won’t even engage with friends or family members who challenge their political views, and will defriend or even disown them. We need some means of reaching these people too, and the hardest part may be simply getting them to listen to us in the first place. Perhaps we need more grassroots action—more protest marches, or even activists going door to door like Jehovah’s Witnesses. Perhaps we need to establish new media outlets that will be as widely accessible but held to a higher standard.

But we must find a way–and we have little time to waste.

Lukewarm support is a lot better than opposition

2016-07-232016-07-13 PNRJ core principles, ethics, heuristics and biases, public policy, Uncategorized agreement, apostate, betrayal, betrayal aversion, bigotry, Blue Wall of Silence, Christianity, Donald Trump, environmentalism, heretic effect, Islam, libertarian, policy, politics, racism, Spanish Inquisition, special interest, tribal paradigm

July 23, JDN 2457593

Depending on your preconceptions, this statement may seem either eminently trivial or offensively wrong: Lukewarm support is a lot better than opposition.

I’ve always been in the “trivial” camp, so it has taken me awhile to really understand where people are coming from when they say things like the following.

From a civil rights activist blogger (“POC” being “person of color” in case you didn’t know):

“Many of my POC friends would actually prefer to hang out with an Archie Bunker-type who spits flagrantly offensive opinions, rather than a colorblind liberal whose insidious paternalism, dehumanizing tokenism, and cognitive indoctrination ooze out between superficially progressive words.

From the Daily Kos:

Right-wing racists are much more honest, and thus easier to deal with, than liberal racists.

From a Libertarian blogger:

I can deal with someone opposing me because of my politics. I can deal with someone who attacks me because of my religious beliefs. I can deal with open hostility. I know where I stand with people like that.

They hate me or my actions for (insert reason here). Fine, that is their choice. Let’s move onto the next bit. I’m willing to live and let live if they are.

But I don’t like someone buttering me up because they need my support, only to drop me the first chance they get. I don’t need sweet talk to distract me from the knife at my back. I don’t need someone promising the world just so they can get a boost up.

In each of these cases, people are expressing a preference for dealing with someone who actively opposes them, rather than someone who mostly supports them. That’s really weird.

The basic fact that lukewarm support is better than opposition is basically a mathematical theorem. In a democracy or anything resembling one, if you have the majority of population supporting you, even if they are all lukewarm, you win; if you have the majority of the population opposing you, even if the remaining minority is extremely committed to your cause, you lose.

Yes, okay, it does get slightly more complicated than that, as in most real-world democracies small but committed interest groups actually can pressure policy more than lukewarm majorities (the special interest effect); but even then, you are talking about the choice between no special interests and a special interest actively against you.

There is a valid question of whether it is more worthwhile to get a small, committed coalition, or a large, lukewarm coalition; but at the individual level, it is absolutely undeniable that supporting you is better for you than opposing you, full stop. I mean that in the same sense that the Pythagorean theorem is undeniable; it’s a theorem, it has to be true.

If you had the opportunity to immediately replace every single person who opposes you with someone who supports you but is lukewarm about it, you’d be insane not to take it. Indeed, this is basically how all social change actually happens: Committed supporters persuade committed opponents to become lukewarm supporters, until they get a majority and start winning policy votes.

If this is indeed so obvious and undeniable, why are there so many people… trying to deny it?

I came to realize that there is a deep psychological effect at work here. I could find very little in the literature describing this effect, which I’m going to call heretic effect (though the literature on betrayal aversion, several examples of which are linked in this sentence, is at least somewhat related).

Heretic effect is the deeply-ingrained sense human beings tend to have (as part of the overall tribal paradigm) that one of the worst things you can possibly do is betray your tribe. It is worse than being in an enemy tribe, worse even than murdering someone. The one absolutely inviolable principle is that you must side with your tribe.

This is one of the biggest barriers to police reform, by the way: The Blue Wall of Silence is the result of police officers identifying themselves as a tight-knit tribe and refusing to betray one of their own for anything. I think the best option for convincing police officers to support reform is to reframe violations of police conduct as themselves betrayals—the betrayal is not the IA taking away your badge, the betrayal is you shooting an unarmed man because he was Black.

Heretic effect is a particular form of betrayal aversion, where we treat those who are similar to our tribe but not quite part of it as the very worst sort of people, worse than even our enemies, because at least our enemies are not betrayers. In fact it isn’t really betrayal, but it feels like betrayal.

I call it “heretic effect” because of the way that exclusivist religions (including all the Abrahamaic religions, and especially Christianity and Islam) focus so much of their energy on rooting out “heretics”, people who almost believe the same as you do but not quite. The Spanish Inquisition wasn’t targeted at Buddhists or even Muslims; it was targeted at Christians who slightly disagreed with Catholicism. Why? Because while Buddhists might be the enemy, Protestants were betrayers. You can still see this in the way that Muslim societies treat “apostates”, those who once believed in Islam but don’t anymore. Indeed, the very fact that Christianity and Islam are at each other’s throats, rather than Hinduism and atheism, shows that it’s the people who almost agree with you that really draw your hatred, not the people whose worldview is radically distinct.

This is the effect that makes people dislike lukewarm supporters; like heresy, lukewarm support feels like betrayal. You can clearly hear that in the last quote: “I don’t need sweet talk to distract me from the knife at my back.” Believe it or not, Libertarians, my support for replacing the social welfare state with a basic income, decriminalizing drugs, and dramatically reducing our incarceration rate is not deception. Nor do I think I’ve been particularly secretive about my desire to make taxes more progressive and environmental regulations stronger, the things you absolutely don’t agree with. Agreeing with you on some things but not on other things is not in fact the same thing as lying to you about my beliefs or infiltrating and betraying your tribe.

That said, I do sort of understand why it feels that way. When I agree with you on one thing (decriminalizing cannabis, for instance), it sends you a signal: “This person thinks like me.” You may even subconsciously tag me as a fellow Libertarian. But then I go and disagree with you on something else that’s just as important (strengthening environmental regulations), and it feels to you like I have worn your Libertarian badge only to stab you in the back with my treasonous environmentalism. I thought you were one of us!

Similarly, if you are a social justice activist who knows all the proper lingo and is constantly aware of “checking your privilege”, and I start by saying, yes, racism is real and terrible, and we should definitely be working to fight it, but then I question something about your language and approach, that feels like a betrayal. At least if I’d come in wearing a Trump hat you could have known which side I was really on. (And indeed, I have had people unfriend me or launch into furious rants at me for questioning the orthodoxy in this way. And sure, it’s not as bad as actually being harassed on the street by bigots—a thing that has actually happened to me, by the way—but it’s still bad.)

But if you can resist this deep-seated impulse and really think carefully about what’s happening here, agreeing with you partially clearly is much better than not agreeing with you at all. Indeed, there’s a fairly smooth function there, wherein the more I agree with your goals the more our interests are aligned and the better we should get along. It’s not completely smooth, because certain things are sort of package deals: I wouldn’t want to eliminate the social welfare system without replacing it with a basic income, whereas many Libertarians would. I wouldn’t want to ban fracking unless we had established a strong nuclear infrastructure, but many environmentalists would. But on the whole, more agreement is better than less agreement—and really, even these examples are actually surface-level results of deeper disagreement.

Getting this reaction from social justice activists is particularly frustrating, because I am on your side. Bigotry corrupts our society at a deep level and holds back untold human potential, and I want to do my part to undermine and hopefully one day destroy it. When I say that maybe “privilege” isn’t the best word to use and warn you about not implicitly ascribing moral responsibility across generations, this is not me being a heretic against your tribe; this is a strategic policy critique. If you are writing a letter to the world, I’m telling you to leave out paragraph 2 and correcting your punctuation errors, not crumpling up the paper and throwing it into a fire. I’m doing this because I want you to win, and I think that your current approach isn’t working as well as it should. Maybe I’m wrong about that—maybe paragraph 2 really needs to be there, and you put that semicolon there on purpose—in which case, go ahead and say so. If you argue well enough, you may even convince me; if not, this is the sort of situation where we can respectfully agree to disagree. But please, for the love of all that is good in the world, stop saying that I’m worse than the guys in the KKK hoods. Resist that feeling of betrayal so that we can have a constructive critique of our strategy. Don’t do it for me; do it for the cause.

If we had range voting, who would win this election?

2016-07-162016-07-19 PNRJ core principles, current events, public policy Ben Carson, Bernie Sanders, Condorcet voting, democracy, Donald Trump, election, Elizabeth Warren, Hillary Clinton, Joe Biden, Marco Rubio, politics, range voting, Sarah Palin, voting

July 16, JDN 2457586

The nomination of Donald Trump is truly a terrible outcome, and may be unprecedented in American history. One theory of its causation, taken by many policy elites (reviewed here by the Brookings Institution), is that this is a sign of “too much democracy”, a sentiment such elites often turn to, as The Economist did in the wake of the Great Recession. Even Salon has published such a theory. Yet as Michael Lind of the New York Times recognized, the problem is clearly not too much democracy but too little. “Too much democracy” is not an outright incoherent notion—it is something that I think in principle could exist—but I have never encountered it. Every time someone claims a system is too democratic, I have found that deeper digging shows that what they really mean is that it doesn’t privilege their interests enough.

Part of the problem, I think, is that even democracy as we know it in the real world is really not all that democratic, especially not in the United States, where it is totally dominated by a plurality vote system that forces us to choose between two parties. Most of the real decision-making happens in Senate committees, and when votes are important they are really most important in primaries. To be clear, I’m not saying that votes don’t count in the US or you shouldn’t vote; they do count, and you should vote. But anyone saying this system is “too democratic” clearly has no idea just how much more democratic it could be.

Indeed, there is one simple change that would both greatly expand democracy, weaken the two-party system, and undermine Trump in one fell swoop, and it is called range voting. I’ve sung the praises of range voting many times before, but some anvils need to be dropped; I guess it’s just this thing I have when a system is mathematically proven superior.

Today I’d like to run a little thought experiment: What would happen if we had used range voting this election? I’m going to use actual poll data, rather than making up hypotheticals like The New York Times did when they tried to make this same argument using Condorcet voting. (Condorcet voting is basically range voting lite, for people who don’t believe in cardinal utility.)

Of course, no actual range voting has been conducted, so I have to extrapolate. So here’s my simple, but I think reasonably reliable, methodology: I’m going to use aggregated favorability ratings from Real Clear Politics (except for Donald Trump, whom Real Clear Politics didn’t include for some reason; for him I’m using Washington Post poll numbers, which are comparable for Clinton). Sadly I couldn’t find good figures on favorability ratings for Jill Stein and Gary Johnson, though I’d very much like to; so sadly I had to exclude them. Had I included them, it’s quite possible one of them could have won, which would make my point even more strongly.

I score the ratings as follows: Every “unfavorable” rating counts as a 0. Every “favorable” rating counts as a 1. Other ratings will be ignored, and I’ll add 10% “unfavorable” ratings to every candidate as a “soft quorum” (here’s an explanation of why we want to do this). Technically this is really approval voting, which is a special case of range voting where you can only vote 0 or 1.

All right, here goes.

Candidate	Favorable	Unfavorable	Overall score
Bernie Sanders	48.4%	37.9%	50.5%
Joe Biden	47.4%	36.6%	50.4%
Elizabeth Warren	36.0%	32.0%	46.2%
Ben Carson	37.8%	42.0%	42.1%
Marco Rubio	36.3%	40.3%	41.9%
Hillary Clinton	39.6%	55.3%	37.7%
Scott Walker	23.5%	29.3%	37.4%
Chris Christie	29.8%	44.5%	35.3%
Mike Huckabee	27.0%	40.7%	34.7%
Rand Paul	25.7%	41.0%	33.5%
Jeb Bush	30.8%	52.4%	33.0%
Mike O’Malley	17.5%	27.0%	32.1%
Bobby Jindal	18.7%	30.3%	31.7%
Rick Santorum	24.0%	42.0%	31.6%
Rick Perry	21.0%	39.3%	29.9%
Jim Webb	10.3%	15.0%	29.2%
Donald Trump	29.0%	70.0%	26.6%

Joe Biden and Elizabeth Warren aren’t actually running, but it would be great if they did (and of course people like them, what’s not to like?). Ben Carson does surprisingly well, which I confess is baffling; he’s a nice enough guy, I guess, but he’s also crazypants. Hopefully if he’d campaigned longer, his approval ratings would have fallen as people heard him talk, much like Sarah Palin and for the same reasons—but note that even if this didn’t happen, he still wouldn’t have won. Marco Rubio was always the least-scary Republican option, so it’s nice to see him come up next. And then of course we have Hillary Clinton, who will actually be our next President. (6th place ain’t so bad?)

But look, there, who is that up at the top? Why, it’s Bernie Sanders.

Let me be clear about this: Using our current poll numbers—I’m not assuming that people become more aware of him, or more favorable to him, I’m just using the actual figures we have from polls of the general American population right now—if we had approval voting, and probably if we had more expressive range voting, Bernie Sanders would win the election.

Moreover, where is Donald Trump? The very bottom. He is literally the most hated candidate, and couldn’t even beat Jim Webb or Rick Perry under approval voting.

Trump didn’t win the hearts and minds of the American people, he knew how to work the system. He knew how to rally the far-right base of the Republican Party in order to secure the nomination, and he knew that the Republican leadership would fall in line and continue their 25-year-long assault on Hillary Clinton’s character once he had.

This disaster was created by our plurality voting system. If we’d had a more democratic voting system, Bernie Sanders would be narrowly beating Joe Biden. But instead Hillary Clinton is narrowly beating Donald Trump.

Trump is not the product of too much democracy, but too little.

Super PACs are terrible—but ineffective

2016-05-072016-05-07 PNRJ current events, public policy advertising, Bernie Sanders, campaign spending, Donald Trump, Hillary Clinton, Jeb Bush, Jeb!, politics, Super-PACs, Ted Cruz, voting

JDN 2457516

It’s now beginning to look like an ongoing series: “Reasons to be optimistic about our democracy.”

Super PACs, in case you didn’t know, are a bizarre form of legal entity, established after the ludicrous Citizens United ruling (“Corporations are people” and “money is speech” are literally Orwellian), which allows corporations to donate essentially unlimited funds to political campaigns with minimal disclosure and zero accountability. This creates an arms race where even otherwise-honest candidates feel pressured to take more secret money just to keep up.

At the time, a lot of policy wonks said “Don’t worry, they already give tons of money anyway, what’s the big deal?”

Well, those wonks were wrong—it was a big deal. Corporate donations to political campaigns exploded in the era of Super PACs. The Citizens United ruling was made in 2010, and take a look at this graph of total “independent” (i.e., not tied to candidate or party) campaign spending (using data from OpenSecrets):

SuperPAC_spending

It’s a small sample size, to be sure, and campaign spending was already rising. But 2010 and 2014 were very high by the usual standards of midterm elections, and 2012 was absolutely unprecedented—over $1 billion spent on campaigns. Moreover, the only reason 2016 looks lower than 2012 is that we’re not done with 2016 yet; I’m sure it will rise a lot higher than it is now, and very likely overtake 2012. (And if it doesn’t it’ll be because Bernie Sanders and Donald Trump made very little use Super-PACs, for quite different reasons.) It was projected to exceed $4 billion, though I doubt it will actually make it quite that high.

Worst of all, this money is all coming from a handful of billionaires. 41% of Super-PAC funds comes from the same 50 households. That’s fifty. Even including everyone living in the household, this group of people could easily fit inside an average lecture hall—and they account for two-fifths of independent campaign spending in the US.

Weirdest of all, there are still people who seem to think that the problem with American democracy is it’s too hard for rich people to give huge amounts of money to political campaigns in secret, and they are trying to weaken our campaign spending regulations even more.

So that’s the bad news—but here’s the good news.

Super-PACs are ludicrously ineffective.

Hillary Clinton is winning, and will probably win the election; and she does have the most Super-PAC money among candidates still in the race (at $76 million, about what the Clintons themselves make in 3 years). Ted Cruz also has $63 million in Super-PAC money. But Bernie Sanders only has $600,000 in Super-PAC money (actually also about 3 times his household income, coincidentally), and Donald Trump only has $2.7 million. Both of these are less than John Kasich’s $13 million in Super-PAC spending, and yet Kasich and Cruz are now dropped out and only Trump remains.

But more importantly, the largest amount of Super-PAC money went to none other than Jeb Bush—a whopping $121 million—and it did basically nothing for him. Marco Rubio had $62 million in Super-PAC money, and he dropped out too. Martin O’Malley had more Super-PAC money than Bernie Sanders, and where is he now? In fact, literally every Republican candidate had more Super-PAC money than Bernie Sanders, and every Republican but Rick Santorum, Jim Gilmore, and George Pataki (you’re probably thinking: “Who?” Exactly.) had more Super-PAC money than Donald Trump.

Indeed, political spending in general is not very effective. Additional spending on political campaigns has minimal effects on election outcomes.

You wouldn’t immediately see that from our current Presidential race; while Rubio raised $117 million and Jeb! raised $155 million and both of them lost, the winners also raised a great deal. Hillary Clinton raised $256 million, Bernie Sanders raised $180 million, Ted Cruz raised $142 million, and Donald Trump raised $48 million. Even that last figure is mainly so low because Donald Trump is a master at getting free publicity; the media effectively gave Trump an astonishing $1.89 billion in free publicity. To be fair, a lot of that was bad publicity—but it still got his name and his ideas out there and didn’t cost him a dime.

So, just from the overall spending figures, it looks like maybe total campaign spending is important, even if Super-PACs in particular are useless.

But empirical research has shown that political spending has minimal effects on actual election outcomes. So ineffective, in fact, that a lot of economists are puzzled that there’s so much spending anyway. Here’s a paper arguing that once you include differences in advertising prices, political spending does matter. Here are two papers proposing different explanations for why incumbent spending appears to be less effective than challenger spending:This one says that it’s a question of accounting for how spending is caused by voter participation (rather than the reverse), while this one argues that the abuse of incumbent privileges like franking gives incumbents more real “spending” power. It’s easy to miss that both of them are trying to explain a basic empirical fact that candidates that spend a lot more still often lose.

Political advertising can be effective at changing minds, but only to a point.

The candidate who spends the most usually does win—but that’s because the candidate who spends the most usually raises the most, and the candidate who raises the most usually has the most support.

The model that makes the most sense to me is that political spending is basically a threshold; you need to spend enough that people know you exist, but beyond that additional spending won’t make much difference. In 1996 that threshold was estimated to be about $400,000 for a House election; that’s still only about $600,000 in today’s money.

Campaign spending is more effective when there are caps on individual contributions; a lot of people find this counter-intuitive, but it makes perfect sense on a threshold model, because spending caps could hold candidates below the threshold. Limits on campaign spending have a large effect on spending, but a small effect on outcomes.

Does this mean we shouldn’t try to limit campaign spending? I don’t think so. It can still be corrupt and undesirable even if isn’t all that effective.

But it is good news: You can’t actually just buy elections—not in America, not yet.

The surprising honesty of politicians

2016-04-302016-05-02 PNRJ critique of neoclassical economics, current events, public policy Bernie Sanders, campaign promises, Chile, clergy, corruption, democracy, Donald Trump, fact-checking, Hillary Clinton, honesty, Jimmy Carter, John Kasich, neoclassical, oligarchy, Pinochet, politics, Ted Cruz, trust

JDN 2457509

The stereotype that politicians are dishonest is so strong that many people use “honest politician” as an example of an oxymoron. There is a sense that politicians never keep their campaign promises, so what they say is basically just meaningless noise.

This impression could scarcely be further from the truth. Politicians are quite honest, and they usually try to keep their campaign promises. On average, about 2/3 of campaign promises are kept. Most of those that aren’t are largely given up under heavy opposition, not simply ignored because they weren’t real objectives. Politicians are distrusted, while clergy are trusted—despite the fact that clergy quite literally make their entire career out of selling beliefs that are demonstrably false and in most cases outright absurd.

Along similar lines, most people seem to have an impression that democracy is largely a show, and powerful oligarchs make most of the real decisions behind the scenes—even Jimmy Carter has been saying this recently. While there is evidence that the rich have disproportionate power over politicians, this is largely only true of Republicans; and furthermore the theory that democracy is meaningless can’t explain two rather important facts:

1. Economic prosperity is strongly correlated with democracy—more strongly correlated than most economists believed until quite recently. Even the “Miracle of Chile” didn’t actually occur when Pinochet reformed the economy—it occurred in the 1990s, after Pinochet ceded power to a democratic government. Stronger democracy is also strongly linked to better education, though surprisingly has little correlation with inequality.

2. Democratic states almost never go to war with one another. Democracies go to war with non-democracies, and non-democracies go to war with one another; but with a few exceptions (and largely limited to young, unstable democracies), democracies do not go to war with other democracies.

If democracy meant nothing, and were all just a sideshow that the elites use to manipulate us, these results would simply be impossible. If voting did not actually shape policy in some fashion, policy outcomes for democracies and non-democracies would have to be identical. In fact they are wildly different, so different it’s actually kind of hard to explain. Apparently similar policies simply seem to work better when they are implemented by democracies—perhaps because in order to be passed in the first place they must have a certain amount of buy-in from the population.

In fact, politicians are more honest than we’d expect them to be based on the incentives provided by elections—they seem to either be acting out of genuine altruism or to advance their reputation in other ways.

Neoclassical economic theory actually has trouble explaining why politicians are so honest—which may have something to do with the fact that politicians who were trained as neoclassical economists are more likely to be corrupt. A similar effect holds for undergraduate students in experiments. Teaching people that human beings are infinite identical psychopaths seems to make them behave a bit more like psychopaths! (Though some of this may also be selection bias: Psychopaths may find economics appealing either because the ideology justifies their behavior or because it’s a pretty lucrative field.)

Part of this false impression clearly comes from the media, and from politicians slandering each other. Hillary Clinton has an almost impeccable fact-check rating—comparable to or arguably even better than Bernie Sanders and John Kasich, both of whom have majority “Mostly True” or “True” ratings. All three are miles ahead of Donald Trump and Ted Cruz, both of whom are over 60% “Mostly False”, “False”, or “Pants on Fire” (the latter is 18% of what Donald Trump says). And yet, Hillary Clinton is widely perceived as dishonest and Donald Trump is widely perceived as “speaking his mind”. Maybe people think Trump is honest because he keeps saying he is. Or maybe it’s because he’s honest about his horrible motivations, even though he gets most of the facts wrong.

These facts should give us hope! Our votes are not meaningless, and our voices do make a difference. We are right to be obsessed with keeping our politicians honest—but it’s time we recognize that it’s working. We are doing something right. If we can figure out what it is, maybe we can do even better.The last thing we want to do right now is throw up our hands and give up.

Whose tax plan makes the most sense?

2016-04-162017-10-08 PNRJ current events, inequality, public policy Bernie Sanders, consumption, Donald Trump, election, Fair Tax, flat tax, Hillary Clinton, income tax, politics, progressive, taxation, taxes, Ted Cruz, trade policy

JDN 2457496

The election for the President of the United States has now come down to four candidates; the most likely winner is Hillary Clinton, but despite claims to the contrary Bernie Sanders could still win the Democratic nomination. On the Republican side Donald Trump holds a small lead over Ted Cruz, and then there’s a small chance that Kasich could win or a new candidate could emerge if neither can win a majority and they go to a brokered convention (I’ve heard Romney and Ryan suggested, and either of them would be far better).

There are a lot of differences between the various candidates, and while it feels partisan to say so I really think it’s pretty obvious that Clinton and Sanders are superior candidates to Trump and Cruz. Trump is a plutocratic crypto-fascist blowhard with no actual qualifications, and Cruz seems to extrude sleaze from his every pore—such that basically nobody who knows him well actually likes him.

In general I’ve preferred Sanders, though when he started talking about trade policy the other day it actually got me pretty worried that he doesn’t appreciate the benefits of free trade. So while I think a lot of Clinton’s plans are kind of lukewarm, I wouldn’t mind if she won, if only because her trade policy is clearly better.

But today I’m going to compare all four candidates in a somewhat wonkier way: Let’s talk about taxes.

Specifically, federal income tax. There are a lot of other types of taxes of course, but federal income tax is the chief source of revenue for the US federal government, as well as the chief mechanism by which the United States engages in redistribution of wealth. I’ll also briefly discuss payroll taxes, which are the second-largest source of federal revenue.
So, I’ve looked up the income tax plans of Hillary Clinton, Bernie Sanders, Donald Trump, and Ted Cruz respectively, and they are summarized below. The first column gives the minimum income threshold for that marginal tax rate (since they vary slightly I’ll be rounding to the nearest thousand). For comparison I’ve included the current income tax system as well. I’m using the rates for an individual filing singly with no deductions for simplicity.

	Current system	Hillary Clinton	Bernie Sanders	Donald Trump	Ted Cruz
0	10%	10%	10%	0%	0%
9,000	15%	15%	15%	0%	0%
25,000	15%	15%	15%	10%	0%
36,000	25%	25%	25%	10%	10%
37,000	25%	25%	25%	10%	10%
50,000	25%	25%	25%	20%	10%
91,000	28%	28%	28%	20%	10%
150,000	28%	28%	28%	25%	10%
190,000	33%	33%	33%	25%	10%
250,000	33%	33%	37%	25%	10%
412,000	35%	35%	37%	25%	10%
413,000	39.6%	35%	37%	25%	10%
415,000	39.6%	39.6%	37%	25%	10%
500,000	39.6%	39.6%	43%	25%	10%
2,000,000	39.6%	39.6%	48%	25%	10%
5,000,000	39.6%	43.6%	48%	25%	10%
10,000,000	39.6%	43.6%	52%	25%	10%

As you can see, Hillary Clinton’s plan is basically our current system, with some minor adjustments and a slight increase in progressivity.In addition to these slight changes in the income tax code, she also proposes to close some loopholes in corporate taxes, but she basically doesn’t change the payroll tax system at all. Her plan would not change a whole lot, but we know it would work, because our current tax system does work.

Despite calling himself a social democrat and being accused of being a far more extreme sort of socialist, Bernie Sanders offers a tax plan that isn’t very radical either; he makes our income tax system a bit more progressive, especially at very high incomes; but it’s nothing out of the ordinary by historical standards. Sanders’ top rate of 52% is about what Reagan set in his first tax cut plan in 1982, and substantially lower than the about 90% top rates we had from 1942 to 1964 and the about 70% top rates we had from 1965 to 1981. Sanders would also lift the income cap on payroll taxes (which it makes no sense not to do—why would we want payroll taxes to be regressive?) and eliminate the payroll tax deduction for fringe benefits (which is something a lot of economists have been clamoring for).

No, it’s the Republicans who have really radical tax plans. Donald Trump’s plan involves a substantial cut across the board, to rates close to the lowest they’ve ever been in US history, which was during the Roaring Twenties—the top tax rate was 25% from 1925 to 1931. Trump also proposes to cut the corporate tax in half (which I actually like), and eliminate the payroll tax completely—which would only make sense if you absorbed it into income taxes, which he does not.

Ted Cruz’s plan is even more extreme, removing essentially all progressivity from the US tax code and going to a completely flat tax at the nonsensically low rate of 10%. We haven’t had a rate that low since 1915—so these would be literally the lowest income tax rates we’ve had in a century. Ted Cruz also wants to cut the corporate tax rate in half and eliminate payroll taxes, which is even crazier in his case because of how much he would be cutting income tax rates.

To see why this is so bonkers, take a look at federal spending as a portion of GDP over the last century. We spent only about 10% of GDP in 1915; We currently take in $3.25 trillion per year, 17.4% of GDP, and spend $3.70 trillion per year, 19.8% of GDP. So Ted Cruz’s plan was designed for an era in which the federal government spent about half what it does right now. I don’t even see how we could cut spending that far that fast; it would require essentially eliminating Social Security and Medicare, or else huge cuts in just about everything else. Either that, or we’d have to run the largest budget deficit we have since WW2, and not just for the war spending but indefinitely.

Donald Trump’s plan is not quite as ridiculous, but fact-checkers have skewered him for claiming it will be revenue-neutral. No, it would cut revenue by about $1 trillion per year, which would mean either large deficits (and concomitant risk of inflation and interest rate spikes—this kind of deficit would have been good in 2009, but it’s not so great indefinitely) or very large reductions in spending.

To be fair, both Republicans do claim they intend to cut a lot of spending. But they never quite get around to explaining what spending they’ll be cutting. Are you gutting Social Security? Ending Medicare? Cutting the military in half? These are the kinds of things you’d need to do in order to save this much money.

It’s kind of a shame that Cruz set the rate so low, because if he’d proposed a flat tax of say 25% or 30% that might actually make sense. Applied to consumption instead of income, this would be the Fair Tax, which is 23% if calculated like an income tax or 30% if calculated like a sales tax—either way it’s 26 log points. The Fair Tax could actually provide sufficient revenue to support most existing federal spending,

I still oppose it because I want taxes to be progressive (for reasons I’ve explained previously), and the Fair Tax, by applying only to consumption it would be very regressive (poor people often spend more than 100% of their incomes on consumption—financing it on debt—while rich people generally spend about 50%, and the very rich spend even less). It would exacerbate inequality quite dramatically, especially in capital income, which would be completely untaxed. Even a flat income tax like Cruz’s would still hit the poor harder than the rich in real terms.

But I really do like the idea of a very simple, straightforward tax code that has very few deductions so that everyone knows how much they are going to pay and doesn’t have to deal with hours of paperwork to do it. If this lack of deductions is enshrined in law, it would also remove most of the incentives to lobby for loopholes and tax expenditures, making our tax system much fairer and more efficient.

No doubt about it, flat taxes absolutely are hands-down the easiest to compute. Most people would probably have trouble figuring out a formula like r = I^{-p}, though computers have no such problem (my logarithmic tax plan is easier on computers than the present system); but even fifth-graders can multiply something by 25%. There is something very appealing about everyone knowing at all times that they pay in taxes one-fourth of what they get in income. Adding a simple standard deduction for low incomes makes it slightly more complicated, but also makes it a little bit progressive and is totally worth the tradeoff.

His notion of “eliminating the IRS” is ridiculous (we still need the IRS to audit people to make sure they are honest about their incomes!), and I think the downsides of having no power to redistribute wealth via taxes outweigh the benefits of a flat tax, but the benefits are very real. The biggest problem is that Cruz chose a rate that simply makes no sense; there’s no way to make the numbers work out if the rate is only 10%, especially since you’re excluding half the population from being taxed at all.

Hopefully you see how this supports my contention that Clinton and Sanders are the serious candidates while Trump and Cruz are awful; Clinton wants to keep our current tax system, and Sanders wants to make it a bit more progressive, while Trump and Cruz prize cutting taxes and making taxes simple so highly that they forgot to make sure the numbers actually make any sense—or worse, didn’t care.

Free trade is not the problem. Billionaires are the problem.

2016-03-192017-10-08 PNRJ development economics, ethics, inequality, public policy Airbnb, Bernie Sanders, Bill Gates, CEO pay, China, confiscation, Donald Trump, exports, Ferrari, free trade, gains from trade, GDP, globalization, household income, immigration, imports, income, inequality, Jeff Bezos, Larry Page, median income, Raw Deal, Robert Reich, TPP, trade, trade deficit, trade policy, TRIPS accord, Uber, wealth

JDN 2457468

One thing that really stuck out to me about the analysis of the outcome of the Michigan primary elections was that people kept talking about trade; when Bernie Sanders, a center-left social democrat, and Donald Trump, a far-right populist nationalist (and maybe even crypto-fascist) are the winners, something strange is at work. The one common element that the two victors seemed to have was their opposition to free trade agreements. And while people give many reasons to support Trump, many quite baffling, his staunch protectionism is one of the stronger voices. While Sanders is not as staunchly protectionist, he definitely has opposed many free-trade agreements.

Most of the American middle class feels as though they are running in place, working as hard as they can to stay where they are and never moving forward. The income statistics back them up on this; as you can see in this graph from FRED, real median household income in the US is actually lower than it was a decade ago; it never really did recover from the Second Depression:

US_median_household_income

As I talk to people about why they think this is, one of the biggest reasons they always give is some variant of “We keep sending our jobs to China.” There is this deep-seated intuition most Americans seem to have that the degradation of the middle class is the result of trade globalization. Bernie Sanders speaks about ending this by changes in tax policy and stronger labor regulations (which actually makes some sense); Donald Trump speaks of ending this by keeping out all those dirty foreigners (which appeals to the worst in us); but ultimately, they both are working from the narrative that free trade is the problem.

But free trade is not the problem. Like almost all economists, I support free trade. Free trade agreements might be part of the problem—but that’s because a lot of free trade agreements aren’t really about free trade. Many trade agreements, especially the infamous TRIPS accord, were primarily about restricting trade—specifically on “intellectual property” goods like patented drugs and copyrighted books. They were about expanding the monopoly power of corporations over their products so that the monopoly applied not just to the United States, but indeed to the whole world. This is the opposite of free trade and everything that it stands for. The TPP was a mixed bag, with some genuinely free-trade provisions (removing tariffs on imported cars) and some awful anti-trade provisions (making patents on drugs even stronger).

Every product we buy as an import is another product we sell as an export. This is not quite true, as the US does run a trade deficit; but our trade deficit is small compared to our overall volume of trade (which is ludicrously huge). Total US exports for 2014, the last full year we’ve fully tabulated, were $3.306 trillion—roughly the entire budget of the federal government. Total US imports for 2014 were $3.578 trillion. This makes our trade deficit $272 billion, which is 7.6% of our imports, or about 1.5% of our GDP of $18.148 trillion. So to be more precise, every 100 products we buy as imports are 92 products we sell as exports.

If we stopped making all these imports, what would happen? Well, for one thing, millions of people in China would lose their jobs and fall back into poverty. But even if you’re just looking at the US specifically, there’s no reason to think that domestic production would increase nearly as much as the volume of trade was reduced, because the whole point of trade is that it’s more efficient than domestic production alone. It is actually generous to think that by switching to autarky we’d have even half the domestic production that we’re currently buying in imports. And then of course countries we export to would retaliate, and we’d lose all those exports. The net effect of cutting ourselves off from world trade would be a loss of about $1.5 trillion in GDP—average income would drop by 8%.

Now, to be fair, there are winners and losers. Offshoring of manufacturing does destroy the manufacturing jobs that are offshored; but at least when done properly, it also creates new jobs by improved efficiency. These two effects are about the same size, so the overall effect is a small decline in the overall number of US manufacturing jobs. It’s not nearly large enough to account for the collapsing middle class.

Globalization may be one contributor to rising inequality, as may changes in technology that make some workers (software programmers) wildly more productive as they make other workers (cashiers, machinists, and soon truck drivers) obsolete. But those of us who have looked carefully at the causes of rising income inequality know that this is at best a small part of what’s really going on.

The real cause is what Bernie Sanders is always on about: The 1%. Gains in income in the US for the last few decades (roughly as long as I’ve been alive) have been concentrated in a very small minority of the population—in fact, even 1% may be too coarse. Most of the income gains have actually gone to more like the top 0.5% or top 0.25%, and the most spectacular increases in income have all been concentrated in the top 0.01%.

The story that we’ve been told—I dare say sold—by the mainstream media (which is, lets face it, owned by a handful of corporations) is that new technology has made it so that anyone who works hard (or at least anyone who is talented and works hard and gets a bit lucky) can succeed or even excel in this new tech-driven economy.

I just gave up on a piece of drivel called Bold that was seriously trying to argue that anyone with a brilliant idea can become a billionaire if they just try hard enough. (It also seemed positively gleeful about the possibility of a cyberpunk dystopia in which corporations use mass surveillance on their customers and competitors—yes, seriously, this was portrayed as a good thing.) If you must read it, please, don’t give these people any more money. Find it in a library, or find a free ebook version, or something. Instead you should give money to the people who wrote the book I switched to, Raw Deal, whose authors actually understand what’s going on here (though I maintain that the book should in fact be called Uber Capitalism).

When you look at where all the money from the tech-driven “new economy” is going, it’s not to the people who actually make things run. A typical wage for a web developer is about $35 per hour, and that’s relatively good as far as entry-level tech jobs. A typical wage for a social media intern is about $11 per hour, which is probably less than what the minimum wage ought to be. The “sharing economy” doesn’t produce outstandingly high incomes for workers, just outstandingly high income risk because you aren’t given a full-time salary. Uber has claimed that its drivers earn $90,000 per year, but in fact their real take-home pay is about $25 per hour. A typical employee at Airbnb makes $28 per hour. If you do manage to find full-time hours at those rates, you can make a middle-class salary; but that’s a big “if”. “Sharing economy”? Robert Reich has aptly renamed it the “share the crumbs economy”.

So where’s all this money going? CEOs. The CEO of Uber has net wealth of $8 billion. The CEO of Airbnb has net wealth of $3.3 billion. But they are paupers compared to the true giants of the tech industry: Larry Page of Google has $36 billion. Jeff Bezos of Amazon has $49 billion. And of course who can forget Bill Gates, founder of Microsoft, and his mind-boggling $77 billion.

Can we seriously believe that this is because their ideas were so brilliant, or because they are so talented and skilled? Uber’s “brilliant” idea is just to monetize carpooling and automate linking people up. Airbnb’s “revolutionary” concept is an app to advertise your bed-and-breakfast. At least Google invented some very impressive search algorithms, Amazon created one of the most competitive product markets in the world, and Microsoft democratized business computing. Of course, none of these would be possible without the invention of the Internet by government and university projects.

As for what these CEOs do that is so skilled? At this point they basically don’t do… anything. Any real work they did was in the past, and now it’s all delegated to other people; they just rake in money because they own things. They can manage if they want, but most of them have figured out that the best CEOs do very little while CEOS who micromanage typically fail. While I can see some argument for the idea that working hard in the past could merit you owning capital in the future, I have a very hard time seeing how being very good at programming and marketing makes you deserve to have so much money you could buy a new Ferrari every day for the rest of your life.

That’s the heuristic I like to tell people, to help them see the absolutely enormous difference between a millionaire and a billionaire: A millionaire is someone who can buy a Ferrari. A billionaire is someone who can buy a new Ferrari every day for the rest of their life. A high double-digit billionaire like Bezos or Gates could buy a new Ferrari every hour for the rest of their life. (Do the math; a Ferrari is about $250,000. Remember that they get a return on capital typically between 5% and 15% per year. With $1 billion, you get $50 to $150 million just in interest and dividends every year, and $100 million is enough to buy 365 Ferraris. As long as you don’t have several very bad years in a row on your stocks, you can keep doing this more or less forever—and that’s with only $1 billion.)

Immigration and globalization are not what is killing the American middle class. Corporatization is what’s killing the American middle class. Specifically, the use of regulatory capture to enforce monopoly power and thereby appropriate almost all the gains of new technologies into into the hands of a few dozen billionaires. Typically this is achieved through intellectual property, since corporate-owned patents basically just are monopolistic regulatory capture.

Since 1984, US real GDP per capita rose from $28,416 to $46,405 (in 2005 dollars). In that same time period, real median household income only rose from $48,664 to $53,657 (in 2014 dollars). That means that the total amount of income per person in the US rose by 49 log points (63%), while the amount of income that a typical family received only rose 10 log points (10%). If median income had risen at the same rate as per-capita GDP (and if inequality remained constant, it would), it would now be over $79,000, instead of $53,657. That is, a typical family would have $25,000 more than they actually do. The poverty line for a family of 4 is $24,300; so if you’re a family of 4 or less, the billionaires owe you a poverty line. You should have three times the poverty line, and in fact you have only two—because they took the rest.

And let me be very clear: I mean took. I mean stole, in a very real sense. This is not wealth that they created by their brilliance and hard work. This is wealth that they expropriated by exploiting people and manipulating the system in their favor. There is no way that the top 1% deserves to have as much wealth as the bottom 95% combined. They may be talented; they may work hard; but they are not that talented, and they do not work that hard. You speak of “confiscation of wealth” and you mean income taxes? No, this is the confiscation of our nation’s wealth.

Those of us who voted for Bernie Sanders voted for someone who is trying to stop it.

Those of you who voted for Donald Trump? Congratulations on supporting someone who epitomizes it.

This is why we must vote our consciences.

2016-03-162016-03-09 PNRJ current events, public policy Bernie Sanders, Black-Scholes, cloneproof, Donald Trump, elections, forecast, global warming, Hillary Clinton, Nate Silver, politics, polls, primary election, Ralph Nader, range voting, Ross Perot, Ted Cruz, voting

JDN 2457465

As I write, Bernie Sanders has just officially won the Michigan Democratic Primary. It was a close race—he was ahead by about 2% the entire time—so the delegates will be split; but he won.

This is notable because so many forecasters said it was impossible. Before the election, Nate Silver, one of the best political forecasters in the world (and he still deserves that title) had predicted a less than 1% chance Bernie Sanders could win. In fact, had he taken his models literally, he would have predicted a less than 1 in 10 million chance Bernie Sanders could win—I think it speaks highly of him that he was not willing to trust his models quite that far. I got into one of the wonkiest flamewars of all time earlier today debating whether this kind of egregious statistical error should call into question many of our standard statistical methods (I think it should; another good example is the total failure of the Black-Scholes model during the 2008 financial crisis).

Had we trusted the forecasters, held our noses and voted for the “electable” candidate, this would not have happened. But instead we voted our consciences, and the candidate we really wanted won.

It is an unfortunate truth that our system of plurality “first-past-the-post” voting does actually strongly incentivize strategic voting. Indeed, did it not, we wouldn’t need primaries in the first place. With a good range voting or even Condorcet voting system, you could basically just vote honestly among all candidates and expect a good outcome. Technically it’s still possible to vote strategically in range and Condorcet systems, but it’s not necessary the way it is in plurality vote systems.

The reason we need primaries is that plurality voting is not cloneproof; if two very similar candidates (“clones”) run that everyone likes, votes will be split between them and the two highly-favored candidates can lose to a less-favored candidate. Condorcet voting is cloneproof in most circumstances, and range voting is provably cloneproof everywhere and always. (Have I mentioned that we should really have range voting?)

Hillary Clinton and Bernie Sanders are not clones by any means, but they are considerably more similar to one another than either is to Donald Trump or Ted Cruz. If all the Republicans were to immediately drop out besides Trump while Clinton and Sanders stayed in the race, Trump could end up winning because votes were split between Clinton and Sanders. Primaries exist to prevent this outcome; either Sanders or Clinton will be in the final election, but not both (the #BernieOrBust people notwithstanding), so it will be a simple matter of whether they are preferred to Trump, which of course both Clinton and Sanders are. Don’t put too much stock in these polls, as polls this early are wildly unreliable. But I think they at least give us some sense of which direction the outcome is likely to be.

Ideally, we wouldn’t need to worry about that, and we could just vote our consciences all the time. But in the general election, you really do need to vote a little strategically and choose the better (or less-bad) option among the two major parties. No third-party Presidential candidate has ever gotten close to actually winning an election, and the best they ever seem to do is acting as weak clones undermining other similar candidates, as Ross Perot and Ralph Nader did. (Still, if you were thinking of not voting at all, it is obviously preferable for you to vote for a third-party candidate. If everyone who didn’t vote had instead voted for Ralph Nader, Nader would have won by a landslide—and US climate policy would be at least a decade ahead of where it is now, and we might not be already halfway to the 2 C global warming threshold.)

But in the primary? Vote your conscience. Primaries exist to make this possible, and we just showed that it can work. When people actually turn out to vote and support candidates they believe in, they win elections. If the same thing happens in several other states that just happened in Michigan, Bernie Sanders could win this election. And even if he doesn’t, he’s already gone a lot further than most of the pundits ever thought he could. (Sadly, so has Trump.)

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